Social gaming, a new source of revenue for the gaming industry :

Peter Relan is chairman of CrowdStar, which is one of the top social game companies with more than 60M monthly users, primarily on Facebook. CrowdStar’s games include Happy Aquarium, Happy Pets, and Happy Island.

He says that Facebook platform remains the core focus for social game developers given the platform’s scale, growth, and monetization potential. The iPhone on the other hand serves more of a product extension for social games until there is more functionality to facilitate micro-transactions and virtual goods. Regarding Apple’s iPad, Mr. Relan expects to migrate the company’s iPhone games to the new platform, while the larger screen will allow for a new breed of casual and social game applications.

CrowdStar’s Happyv Aquarium was one of the first social games to use Facebook Credits as a payment platform, and Mr. Relan indicated that FB Credits would launch throughout the site in the coming months. The launch of FB Credits is expected to generate a sizeable take rate for Facebook in the 30% range vs. 5%-10% for alternative payment options. However, CrowdStar expects that diminishing payment friction and increasing conversion rates will ultimately offset the loss in revenues.

There is plenty of runway for growth for social game industry, with typically 1%-3% of social game users convert to paying customers, and the #1 paying demographic in Happy Aquarium is women aged 35+. As a result, analysts believe that there is significant runway remaining for social games to grow assuming continued distribution growth (on Facebook, smartphones, browsers and other social networks) and increasing conversion rates in other demographic groups. The currently forecast social game revenues (virtual goods, advertising and offers) to nearly double in 2010 to $1.3B worldwide.